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How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.
Should You Consider Fiserv?
The final step today is to look at a stock that meets our ESP qualifications. Fiserv (FI - Free Report) earns a #3 (Hold) six days from its next quarterly earnings release on April 23, 2024, and its Most Accurate Estimate comes in at $1.78 a share.
FI has an Earnings ESP figure of +0.74%, which, as explained above, is calculated by taking the percentage difference between the $1.78 Most Accurate Estimate and the Zacks Consensus Estimate of $1.77. Fiserv is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
FI is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is Fidelity National Information Services (FIS - Free Report) .
Fidelity National Information Services is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 25, 2024. FIS' Most Accurate Estimate sits at $0.96 a share eight days from its next earnings release.
For Fidelity National Information Services, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.96 is +0.34%.
FI and FIS' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>
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How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.
Should You Consider Fiserv?
The final step today is to look at a stock that meets our ESP qualifications. Fiserv (FI - Free Report) earns a #3 (Hold) six days from its next quarterly earnings release on April 23, 2024, and its Most Accurate Estimate comes in at $1.78 a share.
FI has an Earnings ESP figure of +0.74%, which, as explained above, is calculated by taking the percentage difference between the $1.78 Most Accurate Estimate and the Zacks Consensus Estimate of $1.77. Fiserv is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
FI is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is Fidelity National Information Services (FIS - Free Report) .
Fidelity National Information Services is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 25, 2024. FIS' Most Accurate Estimate sits at $0.96 a share eight days from its next earnings release.
For Fidelity National Information Services, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.96 is +0.34%.
FI and FIS' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
Find Stocks to Buy or Sell Before They're Reported
Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>